Buy Whirlpool of India; target of Rs 1760: Edelweiss

November 29
02:42 2017

Edelweiss’ research report on Whirlpool of India

We recently attended Whirlpool of India’s (WHIRL) analyst meet where we interacted with the top brass. Key highlights: a) WHIRL plans to invest more in merchandising, increase promoters on the shop floor, and ad spends would be primarily directed to launch new products, which is well reflected in reducing ad spends & rising trade commissions; and b) SKU launches have seen material traction (up 50%) in past 2-3 years in key segments like refrigerators/washing machines, which remains a focus area. We gain comfort from WHIRL’s effective strategies which are already making a significant mark, as visible from strong top-line/OPM growth in past few quarters. We believe the company’s vision of achieving 2x top-line by FY20 (implying 16% CAGR over FY16-20) seems achievable given its improving competitive profile.

Maintain ‘BUY’ with revised TP of INR1,760 (INR1,511 earlier) maintaining our 33% premium to sector multiple of 35x, which stands rerated in past 6 months.

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